Commonwealth Performance Framework

1.1 The Public Governance, Performance and Accountability Act 2013 (PGPA Act) establishes a performance framework across Australian Government entities and requires Australian Government entities to meet high standards of governance, performance and accountability.⁴ The Public Governance, Performance and Accountability Rule 2014 (PGPA Rule) establishes requirements to give effect to matters covered by the Act.⁵

1.2 The Department of Finance defines how components of the PGPA Act and PGPA Rule combine in the Commonwealth Performance Framework to allow a clear line of sight between planned and actual performance.⁶ The Commonwealth Performance Framework consists of an entity’s Portfolio Budget Statements, corporate plan, and annual performance statements⁷ as illustrated in Figure 1.1.

Figure 1.1: Commonwealth Performance Framework

Source: Department of Finance, Corporate Plans for Commonwealth Entities (Resource Management Guide 132), ‘What is a corporate plan?’, available from https://www.finance.gov.au/government/managing-commonwealth-resources/corporate-plans-commonwealth-entities-rmg-132/what-corporate-plan [accessed 10 May 2024].

1.3 The Commonwealth Performance Framework establishes an entity’s corporate plan as its primary planning document including by requiring:

• performance planning and reporting to draw clear links between the entity’s key activities and the results achieved; and
• performance reporting to provide meaningful performance information.⁸

Department of Climate Change, Energy, the Environment and Water

1.4 The Department of Climate Change, Energy, the Environment and Water (DCCEEW) was established on 1 July 2022. DCCEEW is responsible for:

• climate change and energy functions previously held by the Department of Industry, Science, Energy and Resources;
• environment and water functions previously held by the Department of Agriculture, Water and the Environment;
• international climate change functions previously held by the Department of Foreign Affairs and Trade; and
• water infrastructure functions and the National Water Grid Authority previously held by the Department of Infrastructure, Transport, Regional Development and Communications.

1.5 DCCEEW comprises seven groups, each led by a deputy secretary. The structure of DCCEEW as of March 2024 is depicted in Figure 1.2.

Figure 1.2: Structure of DCCEEW

Source: DCCEEW organisational chart March 2024.

1.6 As illustrated in Figure 1.3, DCCEEW’s staffing level rose by 61 per cent from 2,414 staff in 2022–23 to 3,895 in 2023–24. DCCEEW’s budgeted resourcing grew by 21 per cent from 2022–23 to 2023–24. DCCEEW’s total estimated budget in 2023–24 was $28.7 billion.

Figure 1.3: DCCEEW resourcing and staffing level

Source: DCCEEW, Annual Report 2022–23, Commonwealth of Australia, Canberra, 2023, available from https://www.dcceew.gov.au/about/reporting/annual-report [accessed 27 March 2024].

Australian Government, Portfolio Budget Statements 2023–24, Budget Related Paper No. 1.3. Climate Change, Energy, the Environment and Water Portfolio, Commonwealth of Australia, Canberra, 2023, available from https://www.dcceew.gov.au/sites/default/files/documents/dcceew-2023-24-pbs.pdf [accessed 14 February 2024].

1.7 DCCEEW published its first corporate plan — for 2022–23 — in March 2023. The 2023–24 Corporate Plan was published in August 2023.⁹ Figure 1.4 illustrates the release of the two corporate plans and other performance framework documents since the establishment of the entity. DCCEEW’s first annual report was tabled in the Parliament on 20 October 2023.¹⁰

Figure 1.4: DCCEEW’s performance framework documents

Source: ANAO analysis of departmental documentation.

Rationale for undertaking the audit

1.8 The Commonwealth Performance Framework, established by the PGPA Act, requires Commonwealth entities to annually publish a corporate plan that sets out how they intend to achieve their purposes, and how their performance will be measured and assessed. Commonwealth entities must report on their performance in annual performance statements that are included in an entity’s annual report that is tabled in the Parliament.

1.9 DCCEEW is a new entity combining functions from four different entities following a machinery of government change in July 2022. This audit will provide independent assurance to the Parliament that DCCEEW’s corporate planning meets the requirements and intent of the Commonwealth Performance Framework in operating as its primary planning document.

Audit approach

Audit objective, criteria and scope

1.10 The objective of this audit was to assess the effectiveness of DCCEEW’s corporate plan as its primary planning document in accordance with the PGPA Act.

1.11 To form a conclusion against the objective, the following criteria were adopted.

• Has DCCEEW developed its corporate plan in line with the Commonwealth Performance Framework?
• Is DCCEEW effectively implementing its corporate plan?
• Does DCCEEW have an effective assurance framework to support reporting against the corporate plan outcomes?

Audit methodology

1.12 The audit methodology involved examining departmental documentation, including meeting papers of governance groups, and meeting with relevant departmental staff.

1.13 The ANAO also received one submission from the public via the citizen contribution facility on the ANAO website.

1.14 The audit was conducted in accordance with ANAO Auditing Standards at a cost to the ANAO of approximately $364,785.

1.15 The team members for this audit were Johanna Bradley, Emma Hussey, Mary Potter, Ashlee Johnson, and Corinne Horton.

2.1 The Public Governance, Performance and Accountability Act 2013 (PGPA Act) and Public Governance, Performance and Accountability Rule 2014 (PGPA Rule) establishes an entity’s corporate plan as its primary planning document and determines mandatory corporate plan content. The Commonwealth Performance Framework promotes a high standard of planning, measuring, evaluating and reporting on Commonwealth entity performance and provides for consistency across planning and reporting on performance.¹¹ The accountable authority is responsible for preparing a corporate plan and measuring and assessing the performance of the entity in achieving its purposes, in accordance with the PGPA Act.¹²

2.2 Strategic and concerted leadership over the performance cycle within an entity is essential to good management and the effective stewardship of public resources.¹³ Effective governance will support the accountable authority to ensure the corporate plan is the primary planning document and guide the achievement of the entity’s objectives and key priorities.¹⁴ It will also ensure compliance with the requirements of the PGPA Act and position the accountable authority to be able to accurately report its progress.¹⁵

Was the development of DCCEEW’s corporate plan supported by appropriate governance arrangements?

Departmental governance and oversight structures

2.3 DCCEEW was established on 1 July 2022 and the Executive Board met for the first time on 15 July 2022. The Executive Board Charter (approved by the Executive Board in December 2023) states that the Executive Board is responsible for the overall governance and strategic direction of the department. This includes oversight of the development, implementation, and review of the corporate plan.

2.4 The Executive Board consists of the Secretary and deputy secretaries and meets fortnightly. On 10 August 2022, the Executive Board agreed to a structure for DCCEEW’s governance committees and forums, establishing two categories of governance groups (depicted in Figure 2.1).

• Organisational Governance groups provide the key decision-making and governance mechanisms and are supported by formal secretariat arrangements. Board committees were established with decision-making authority through terms of reference.
• Strategic and Tactical Engagement groups provide forums for updates from the Secretary and deputy secretaries on current focus areas and provide opportunities for information sharing and showcasing activities. Actions are tracked by operational areas.

2.5 The Executive Board endorsed terms of reference for each committee. The terms of reference require the chair of each committee to report to the Executive Board after each meeting. The committees first met in November and December 2022, and the first reports were provided to the Executive Board on 14 December 2022.

2.6 The Performance and Audit Team within the Portfolio Strategy Division is responsible for preparing the corporate plans, drafting the non-financial aspects of the Portfolio Budget Statements (PBS), preparing drafts of the annual report, supporting the department’s approach to performance reporting, and managing the department’s internal audit function.

Figure 2.1: DCCEEW governance committees and forums

Note: The Executive Board established a Work Health and Safety Committee in August 2022, which was subsequently merged into the Culture and People Committee in April 2023.

The Risk Committee was established in December 2023.

Source: DCCEEW intranet and internal documentation.

Development of the 2022–23 Corporate Plan

2.7 On 24 August 2022, the Executive Board discussed a one-page ‘Corporate Roadmap’ that outlined proposed approaches to developing ‘key corporate artefacts’ for the newly established department, including a new corporate plan. The Executive Board agreed:

• to publish the inaugural corporate plan ‘by January/February 2023’;
• that an Executive Board strategy session would be held in October 2022 ‘to provide a top-down perspective on a vision, purpose and brand identity to frame and guide staff consultations’;
• to discuss the principles and interim purpose statement with the SES, including at a full day SES forum in November 2022¹⁶;
• to include broader consultation with staff;
• that the development of the interim purpose statement and principles would be discussed at the Strategic Policy Committee¹⁷; and
• to procure an external consultant to assist with the ‘establishment of corporate planning’ and other communication activities.

2.8 In November 2022, DCCEEW developed a plan to guide the preparation of the 2022–23 Corporate Plan. The plan included timeframes, key deliverables and consultation arrangements and aligned with the original consultation approach agreed by the Executive Board in August 2022. Twelve deliverables were to be completed over five months from October 2022 to February 2023. Figure 2.2 provides the deliverables and timeframes as agreed by the Executive Board in November 2022. All 12 deliverables were completed in accordance with the plan.

Figure 2.2: 2022–23 Corporate Plan development plan

Source: DCCEEW internal documentation.

Consultation

2.9 DCCEEW planned to consult with the Australian Public Service Commission, the Department of the Prime Minister and Cabinet, and the National Indigenous Australians Agency on the draft vision and purposes. Consultation occurred with the Australian Public Service Commission, the Department of the Prime Minister and Cabinet, and the Department of Finance. Consultation did not occur with the National Indigenous Australians Agency.

2.10 The 2022–23 Corporate Plan lists external organisations and bodies that will make a significant contribution towards achieving the entity’s purposes. On 8 March 2024, DCCEEW advised the ANAO that it relies on operational areas of the department to engage with partners and stakeholders and to take this into consideration when providing input into the corporate plan.

Publication

2.11 In August 2022, the Executive Board agreed the 2022–23 Corporate Plan would be published by ‘January/February 2023’ (see paragraph 2.7). In January 2023, the Executive Board was provided with a revised publication date of ‘late February/early March 2023’.

2.12 The deliverables and timeframes agreed by the Executive Board on 28 November 2022 stated that the design phase for the 2022–23 Corporate Plan would start in October 2022 (see paragraph 2.8). These actions occurred over November and December 2022. DCCEEW published its first corporate plan for 2022–23 in March 2023.

Development of performance measures

2.13 The 2022–23 Corporate Plan contained 19 performance measures against which performance of DCCEEW’s purposes would be measured. DCCEEW developed a measure profile to support each of these measures during the development of the 2022–23 Corporate Plan.

2.14 The measure profiles contained:

• the relevant PBS outcome and program;
• the data source and methodology for selecting, analysing and validating the data;
• an assessment of compliance with the PGPA Rule; and
• the previous department from which the measure had come, if applicable.

2.15 Each measure profile required certification by the relevant division head (the ‘measure owner’), including sign-off of the assessment of the measure against section 16EA of the PGPA Rule.

2.16 Profiles for 11 measures were incomplete. Ten profiles did not provide information on relevant departmental or public outputs relating to the measure. Four measure profiles did not provide the date of certification by the measure owner. DCCEEW was unable to provide evidence of certification by measure owners for the measure profiles.

Consideration of risks to the development of the 2022–23 Corporate Plan

2.17 DCCEEW established its Enterprise Risk Management Framework in March 2023. Before March 2023, DCCEEW staff were instructed to operate under the risk management framework from the previous Department of Agriculture, Water and the Environment and Department of Industry Science, Energy and Resources.

2.18 During the development of the 2022–23 Corporate Plan, the Executive Board considered the risk of not setting a clear purpose for the department; the risk of not complying with legislative requirements; the risk of poor staff engagement; and the risk of not delivering within a tight timeframe. Controls were identified and implemented for three of the four risks. A control was not identified for the risk of not delivering within the timeframe.

Development of the 2023–24 Corporate Plan

2.19 DCCEEW drafted an implementation plan to guide the development of the 2023–24 Corporate Plan. The 2023–24 Corporate Plan Implementation Plan included a timeline, roles and responsibilities, requirements regarding record keeping, and a governance structure. The 2023–24 Corporate Plan Implementation Plan was not required to be approved by a governance committee, and was not approved by the division responsible for corporate plan development.

2.20 Figure 2.3 provides the governance structure for the development of the 2023–24 Corporate Plan as presented in the Corporate Plan Implementation Plan.

Figure 2.3: Governance over 2023–24 Corporate Plan development

Note: Section 17 of the PGPA Rule requires the audit committee of a Commonwealth entity to provide independent advice and assurance to the entity’s accountable authority.

The Program and Performance Committee was established by the Executive Board to support the Executive Board (see Figure 2.1).

Source: DCCEEW 2023–24 Corporate Plan Implementation Plan.

2.21 The 2023–24 Corporate Plan was published five months after the 2022–23 Corporate Plan was published. The changes that were made in the 2023–24 Corporate Plan largely related to continuing to develop performance measures.

2.22 The 2023–24 Corporate Plan Implementation Plan outlines milestones that were to be completed over three months from May to August 2023. Of 12 key milestones in the 2023–24 Corporate Plan Implementation Plan, 11 were achieved as planned. The 2023–24 Corporate Plan Implementation Plan intended that the draft 2023–24 Corporate Plan would be provided to the Secretary twice. The Secretary was provided with the draft 2023–24 Corporate Plan once, after it was reviewed by the Executive Board and the Program and Performance Committee.

2.23 The Program and Reporting Sub-Committee (a sub-committee of the Audit Committee) provided assurance over the 2023–24 Corporate Plan and performance measures, discussing some of the measure profiles in detail. The Executive Board and the Program and Performance Committee both endorsed the draft 2023–24 Corporate Plan.

Consultation

2.24 The Corporate Plan Implementation Plan did not include consultation with external entities involved in contributing to meeting DCCEEW’s outcomes. DCCEEW engaged with the Department of Finance in the development stages of the corporate plan, on alignment with section 16EA of the PGPA Rule.¹⁸

Measure profiles

2.25 The 2023–24 Corporate Plan Implementation Plan included a template for measure profiles as was used to support performance measures included in the 2022–23 Corporate Plan (see paragraph 2.14). The template included an assessment of compliance with section 16EA of the PGPA Rule. In July 2023, measure profiles were prepared for all 21 measures using the template.

2.26 The Implementation Plan included templates for measure owners (division heads) and deputy secretaries to certify that ‘the information contained in the 2023–24 Corporate Plan relating to [the performance measure] complies with section 16EA of the PGPA Rule 2014’. Certification was acquired through email. The emails requesting certification did not include the measure profile being certified for six of the 13 measure owners. Of 21 performance measures in the 2023–24 Corporate Plan, 20 were certified by the relevant measure owner, and all were certified by the relevant deputy secretary.¹⁹

2.27 The ANAO met with measure owners in January 2024 to discuss their role in certifying the performance measures. Measure owners reported being confident they understood their role and were sufficiently supported by the Portfolio Strategy Division, which was coordinating the measure profile completion and certifications.

2.28 The 2023–24 Corporate Plan Implementation Plan notes that particular attention would be paid to whether the measures were reliable, verifiable, and free from bias.²⁰ DCCEEW advised the ANAO on 1 March 2024 that this occurred through the self-assessment against section 16EA of the PGPA Rule in the development of the measure profiles.

Consideration of risks to the development of the 2023–24 Corporate Plan

2.29 DCCEEW’s Enterprise Risk Management Framework released in March 2023 requires risk management to be integrated into planning and decision-making. No formal risk assessments were undertaken for the development of the 2023–24 Corporate Plan. No risks to the development of the 2023–24 Corporate Plan were considered by the Executive Board.

Does the corporate plan meet the mandatory requirements of the PGPA Act and PGPA Rule?

Minimum publishing and content requirements

2.30 The accountable authority of a Commonwealth entity must prepare and publish a corporate plan each year in accordance with any requirements prescribed by the PGPA Rule.²¹ Section 16E of the PGPA Rule outlines the content and publishing requirements for these corporate plans.

Publishing requirements

2.31 Both corporate plans were provided to the Minister for the Environment and Water, the Minister for Climate Change and Energy, and the Minister for Finance prior to publishing them on the department’s website, as required by the PGPA Rule.²²

2.32 Corporate plans must be published ‘by the last day of the second month of the reporting period for which the plan is prepared’.²³ The PGPA Rule makes a provision for new entities to publish the first corporate plan ‘as soon as practicable after the plan is prepared.²⁴

2.33 The 2022–23 Corporate Plan was published on 10 March 2023. The 2023–24 Corporate Plan was published by the required date of 31 August 2023. DCCEEW met the minimum requirements for the publication of its 2022–23 and 2023–24 corporate plans.

Content requirements

2.34 The PGPA Rule requires that specific matters be included in entity corporate plans.²⁵ Resource Management Guide (RMG) 132 provides guidance on how to fulfil the requirements of the PGPA Rule.²⁶ Table 2.1 provides an assessment of the content of the 2022–23 and 2023–24 corporate plans against the requirements of the PGPA Rule, as per the guidance in RMG 132.

Table 2.1: Minimum corporate plan content requirements for 2022–23 and 2023–24

Key: ○ Requirement has not been met ◔ Requirement has been partially met ◑ Requirement has been half met ◕ Requirement has been largely met ● Requirement has been met.

Note a: DCCEEW’s corporate plan also contains a vision. A vision statement is not a requirement under the PGPA Act and the ANAO has not audited DCCEEW’s vision.

Source: ANAO analysis of DCCEEW’s 2022–23 and 2023–24 corporate plans.

2.35 As demonstrated in Table 2.1, DCCEEW met the mandatory requirements of section 16E of the PGPA Rule.

2.36 Subsection 16E(2) of the PGPA Rule requires the corporate plan to include ‘details of any organisation or body that will make a significant contribution towards achieving the entity’s purpose through cooperation with the entity, including how that cooperation will achieve those purposes’.²⁷ RMG 132 highlights that this requirement ‘aligns with the requirement for entities who produce Portfolio Budget Statements to report links to the programs of other entities which assist them achieve their Outcomes’.²⁸

2.37 The 2023–24 PBS lists 30 Australian Government entities who deliver programs that contribute to achieving DCCEEW’s outcomes.²⁹ Five of those 30 entities contribute to three or four of DCCEEW’s outcomes (see Table 2.2).

Table 2.2: Entities in DCCEEW’s PBS that contribute to three or four of DCCEEW’s outcomes

Note a: DCCEEW has four outcomes. The outcomes relate to: 1 — Climate change and energy; 2 — Environment; 3 — Antarctica; 4 — Water. See Appendix 3 for the full outcome statements.

Source: 2023–24 Budget Paper 1.3. Climate Change, Energy, the Environment and Water Portfolio and DCCEEW 2023–24 Corporate Plan.

2.38 The 2023–24 Corporate Plan does not include the Department of Industry, Science and Resources, or the Department of the Treasury, although both departments contribute to achieving three of DCCEEW’s four outcomes. On 15 December 2023, DCCEEW advised the ANAO that organisations and bodies in the 2023–24 Corporate Plan were ‘initially identified as part of the (Machinery of Government) arrangements, then tested with the Executive Board as part of the consultation process’.

Performance measures

2.39 Australian Government entities are required to include performance measures in their corporate plan to measure and assess their performance in the reporting period. The performance measure results are included in the entity’s annual performance statements in the annual report, which is tabled in the Parliament at the end of the reporting period. To meet the requirements of the PGPA Rule, each performance measure must:

• relate directly to one or more purposes or key activities;
• use information sources and methodologies that are reliable and verifiable;
• provide an unbiased basis for measurement/assessment; and
• provide a basis for assessment of entity’s performance over time.³⁰

2.40 Collectively the measures must, where reasonably practicable, comprise a mix of quantitative and qualitative measures and include measures of an entity’s output, efficiency, and effectiveness if these are appropriate.³¹

2.41 The ANAO was funded as part of the 2021–22 Budget to implement the ongoing program of performance statements audits. This funding established assurance of non-financial reporting as a core component of assurance to the Parliament. Conducting annual audits of performance statements ensures that the Parliament receives the same level of assurance on performance statements as it does for financial statements.³² On 16 January 2023, in response to correspondence from the Auditor-General, the Minister for Finance requested, under section 40 of the PGPA Act, that the Auditor-General undertake assurance audits of the Department of Industry, Science and Resources and the Department of Infrastructure, Transport, Regional Development, Communications and the Arts instead of the Department of Employment and Workplace Relations³³ and DCCEEW as part of the 2022–23 audit program.³⁴

Measures in the 2022–23 Corporate Plan

2.42 The 2022–23 Corporate Plan contained 19 performance measures. Appendix 3 contains a list of DCCEEW’s purpose, outcomes, key activities, and performance measures in the 2022–23 Corporate Plan. Each measure included targets and was supported by a rationale, methodology and data sources that will be used, and outputs. The corporate plan identified the type of each performance measure such as effectiveness or output as well as if it was a quantitative or qualitative measure. The corporate plan also identified regulatory measures.³⁵

2.43 Of the 19 measures, the ANAO assessed that 15 provided a good basis for measuring performance and complied with the requirements of section 16EA of the PGPA Rule. Section 16EA of the PGPA Rule requires that performance measures must provide an unbiased basis for measurement or assessment. The ANAO assessed that three of the 2022–23 performance measures had a risk that the measurement or assessment of the results in the annual performance statements could be biased. Each of these three measures had targets without clearly pre-defined tolerances and reporting against the target in the annual performance statements could be biased towards being achieved or partly achieved.

2.44 Collectively, the 2022–23 performance measures comprised effectiveness, outputs, and qualitative and quantitative measures. DCCEEW identified one performance measure (EN06) as an efficiency measure, however the ANAO assessed this measure as not meeting the definition of an efficiency measure as it does not assess cost or the ratio of input to outputs.³⁶ DCCEEW did not consider this measure an efficiency measure in 2023–24.

Measures in the 2023–24 Corporate Plan

2.45 DCCEEW revised its performance measures for its 2023–24 Corporate Plan by:

• adding seven new measures;
• removing five measures; and
• amending nine measures, including by adding an additional target to one measure.³⁷

2.46 Three of the 21 measures in the 2023–24 Corporate Plan may not meet all PGPA Rule requirements as they are either at risk of bias or may not provide a measure of performance over time. This may limit DCCEEW’s ability to accurately measure these activities and demonstrate performance against its key activities over time.

2.47 The 2023–24 Corporate Plan included more qualitative measures than in the previous year. DCCEEW had not identified any performance measures as efficiency measures for 2023–24.

2.48 On 8 March 2024, DCCEEW advised the ANAO that the Executive Board would consider proxy measures for efficiency for inclusion in the 2024–25 Corporate Plan. Further information relating to improvements made by DCCEEW are outlined in paragraphs 4.30 to 4.34 and Appendix 2.

2.49 Compliance with the performance framework, including the development of appropriate performance measures, is positioning DCCEEW to be able to accurately report its performance against its key activities to the Parliament. DCCEEW needs to continue to refine its performance measures to ensure they provide an unbiased basis for measurement and provide a basis for assessment of performance over time.

Has DCCEEW appropriately applied the clear read principle?

2.50 The Commonwealth Performance Framework provides that entities draw a clear line of sight between planned and actual performance.³⁸ Performance measures in the corporate plan and PBS (and any other budget statements) are reconciled in the annual performance statements at the end of each reporting period, which are included in the entity annual report that is tabled in the Parliament. As such, ‘it is important that the performance measures in both planning documents are consistent and work together to enable a coherent set of performance results to be included in the annual performance statements. This provides a clear read between these documents.’³⁹

Alignment in the 2022–23 performance cycle

2.51 There was alignment across the outcomes, programs, key activities and performance information presented in in the 2022–23 PBS and the 2022–23 Corporate Plan. Outcomes in the 2022–23 PBS were reflected in the 2022–23 Corporate Plan. There was alignment between the programs in the 2022–23 PBS and key activities in the 2022–23 Corporate Plan. The key activities in the 2022–23 Corporate Plan were aligned to relevant outcomes.

2.52 The 2022–23 PBS contained one performance measure per program. The corporate plan contained ten additional measures across five programs and key activities. There were minor changes to some measures and targets.

2.53 There were minor changes between the performance measures in the 2022–23 PBS and the 2022–23 Corporate Plan. DCCEEW’s 2022–23 PBS noted that ‘[a]s per Department of Finance direction, one measure has been applied per program’.⁴⁰ Two performance measures in the 2022–23 Corporate Plan replaced measures in corporate plans from the departments that were previously responsible for those functions, prior to DCCEEW’s establishment.⁴¹

2.54 DCCEEW’s 2022–23 PBS was released on 25 October 2022 — just under four months after DCCEEW was established on 1 July 2022 — and its first corporate plan was released in March 2023. On 9 February 2024, DCCEEW advised the ANAO that the 2022–23 PBS did not contain a full suite of performance measures because the department was reviewing its measures for the 2022–23 Corporate Plan.

2.55 Appendix 1 in the 2022–23 Corporate Plan contains an explanation of the changes to performance measures designed by the previous function holders — the Department of Industry, Science, Energy and Resources, and the Department of Agriculture, Water and Environment — as well as changes since the 2022–23 PBS.

Alignment in the 2023–24 performance cycle

2.56 The 2023–24 PBS was tabled in May 2023 and the 2023–24 Corporate Plan was published in August 2023 (see Figure 1.4). Clear read across the performance cycles is examined further below.

2.57 DCCEEW reviewed its performance measures in line with revised outcomes and key activities in 2023–24. The 2023–24 PBS and 2023–24 Corporate Plan maintained clear connections between each element, with key activities and performance measures in the 2023–24 Corporate Plan aligned to each PBS outcome, which led up to the department’s overarching purposes.

2.58 The 2023–24 Corporate Plan included a new key activity with a new performance measure under Outcome 1, following additional funding in the 2023–24 budget.⁴² It is good practice for entities to consider the key activities and performance measures that should be included in their corporate plan on the basis of program appropriations. Where there are large appropriations for specific policies, activities or projects, entities should consider including a measure or measures to promote accountability and transparency and enable parliamentary and government scrutiny of whether these policies, activities or projects are delivering their intended return on investment and meeting the expectations of government.⁴³

2.59 In total, there were 12 performance measures included in the 2023–24 Corporate Plan that were not in the PBS.

• Four were performance measures that were included in the previous year’s corporate plan that had been carried across.
• Eight performance measures across five key activities were newly introduced in the 2023–24 Corporate Plan.

2.60 One key activity under Outcome 2 did not have any performance measures in the corporate plan.⁴⁴ The heritage performance measure included in the PBS was not in the corporate plan. The corporate plan noted that a number of reforms are progressing in the heritage space and stated that ‘[t]he development of future performance measures are currently under review and will be influenced by progress on these reforms’.⁴⁵

Line of sight across performance cycles

2.61 Demonstrating how reporting on performance information changes over time allows entities to demonstrate how priorities change and enables the Parliament to monitor the delivery of parliamentary priorities. Providing a clear line of sight in planning documents across years (from 2022–23 to 2023–24) enables comparison across performance cycles. This line of sight is provided if performance information that has been added to, amended, or removed between performance cycles is clearly explained to the reader.⁴⁶

2.62 The programs and key activities outlined in the 2022–23 performance documents were revised for the 2023–24 PBS. As noted at paragraph 2.58, a new key activity (1.3) was introduced under Outcome 1 in the 2023–24 Corporate Plan. Figure 2.4 illustrates the changes in program structure between the documents.

Figure 2.4: Comparison of 2022–23 and 2023–24 programs and key activities

Source: ANAO summary of departmental information.

2.63 Consistent with guidance from Department of Finance, these changes were outlined in DCCEEW’s 2023–24 PBS.⁴⁷ The PBS noted that ‘[t]he department is currently reviewing its performance information in the context of new government and departmental responsibilities and initiatives’, with further refinements to be reflected in the 2023–24 Corporate Plan. The 2023–24 Corporate Plan stated that the department had revised its outcomes and programs in the 2023–24 PBS ‘to better reflect our core work’. This approach provided users with context for the changes and a basis for comparison with previous year’s performance information.

2.64 As outlined in paragraph 2.45, across DCCEEW’s 2022–23 and 2023–24 corporate plans, seven new measures were added, five measures were removed, and nine measures were revised. A detailed explanation for these changes was provided in Appendix 1 of the 2023–24 Corporate Plan. Readers were alerted that performance measures had been revised ‘in line with the revised outcomes and key activities’ before the performance information was presented in the corporate plan, and were directed to Appendix 1 for a summary of the changes. This approach assists the reader to identify differences in an entity’s performance compared to the previous year, and understand why they occurred, facilitating clear read.

3.1 Under the Commonwealth Performance Framework, the corporate plan is intended to be an entity’s primary planning document. Strategic priorities identified in the corporate plan should be actively used by the entity to support decision making and manage the business, and senior management should have oversight over the implementation of these strategic priorities.

3.2 In addition to identifying key activities the entity will undertake to achieve its purposes, a corporate plan includes strategies and plans the entity will implement to have the capability it needs, and a summary of the risk oversight and management systems of the entity including key risks the entity will manage.⁴⁸

Has corporate planning effectively informed business planning?

Strategies to support the implementation of the corporate plan

3.3 DCCEEW used the development of the purposes and vision in the 2022–23 Corporate Plan to set the strategic direction for the new department and discuss tensions inherent in the department’s climate change, energy and environmental activities.

3.4 When it endorsed the 2022–23 Corporate Plan, the Executive Board agreed to a range of proposed activities to embed the vision and purposes throughout the department. The activities DCCEEW implemented included publishing the corporate plan on the DCCEEW intranet, an internal video message from the Secretary and deputy secretaries, an all Senior Executive Services briefing on 10 March 2023 to launch the corporate plan, and the creation of a visual identity incorporating First Nations themes.⁴⁹ A corporate plan intranet page and a process to help staff undertake divisional planning under the corporate plan were delivered following the release of the 2023–24 Corporate Plan in August 2023.

Divisional planning

3.5 The 2022–23 Corporate Plan was intended to inform DCCEEW’s divisional plans; staff development plans; and monitoring and reporting, insights and analytics. Following the release of the 2022–23 Corporate Plan, the Portfolio Strategy Division advised the Executive Board it would ‘work with divisions to prepare business plans that define the key activities under each program’. The Executive Board agreed to having ‘mature business plans complete at the divisional level prior to the new financial year in 2023–24’.

3.6 The Executive Board agreed to a divisional planning process in July 2023. The process comprised documenting the priorities of each division under key activities, identifying activities that cut across the department, and the main risks to being able to deliver key priorities. This process was ‘to align with the release of the 2023–24 Corporate Plan’.⁵⁰

3.7 The first stage of the process commenced in October 2023 when the Portfolio Strategy Division provided divisional planning information to divisions. The Portfolio Strategy Division prepared information to support divisional planning to ‘create a line of sight from the vision, purposes, outcomes and key activities to the work of the division’.

• Four ‘corporate cascades’ were prepared — one for each of the four outcomes — to guide the divisional consideration of strategic priorities.
  • The cascades provide ‘high-level mapping of legislation, Portfolio Budget Statement budget measures, ministerial priorities, and major departmental programs/projects/initiatives’.
  • The cascades were provided to deputy secretaries and heads of divisions with a request to identify divisional priorities and activities that cut across divisions and were uploaded to DCCEEW’s intranet.
• A divisional business plan template was uploaded to DCCEEW’s intranet. It included a section to identify alignment with the outcomes and key activities supported by the divisional activities.

3.8 Divisional plans prepared through this process demonstrate that divisions have considered to which key activities and outcomes their work contributes, and their priorities under the key activities. The divisional plans do not provide information on available resourcing or capabilities to deliver these strategic priorities and key activities.

3.9 On 8 January 2024, DCCEEW advised the ANAO that it was collating the divisional risk registers as part of the divisional planning process.

3.10 On 7 May 2024, DCCEEW advised the ANAO that the second stage of the divisional planning process involved targeted workshops with each division to identify out of tolerance risks. DCCEEW plans to ‘embed risk monitoring and review into a division level planning cycle to maintain focus on these risks by relevant risk owners’.

Enterprise Performance Framework

3.11 In November 2023, the Executive Board agreed to a ‘performance framework and measures uplift’ through the development of:

an enterprise performance framework to provide a logical, consistent and transparent process for planning, monitoring and reporting (including key activities and performance measures) across the department.

3.12 The Executive Board was provided with a roadmap for the development of the Enterprise Performance Framework, with final approval and project closure scheduled for late February 2024. Table 3.1 lists the steps provided in the roadmap.

Table 3.1: Enterprise Performance Framework Roadmap

Source: ANAO analysis of departmental documentation.

3.13 DCCEEW engaged Nous Group from November 2023 until February 2024 to provide the following two services.⁵¹

• Design new approach; including draft enterprise-level guidance on reviewing, developing and updating key activities and measures, and proposed updates to the key activities and measures.
• Delivery of final, endorsed enterprise performance framework, including finalised enterprise-level guidance and confirmed performance measure updates and final, endorsed measure documentation, including data dossiers, performance assessment tools, and third-party verifications.

3.14 The Enterprise Performance Framework was agreed by the Secretary in May 2024 following review by the Program and Performance Committee, Audit Committee and Performance Reporting Sub-Committee.

Developing capabilities

3.15 Subsection 16E(2) of the Public Governance and Performance Accountability Rule 2014 (PGPA Rule) requires entities to include ‘strategies and plans the entity will implement to have the capability it needs to undertake its key activities and achieve its purposes’. The 2022–23 and 2023–24 corporate plans outline nine strategies and plans to improve DCCEEW’s capabilities and deliver on its outcomes.⁵² By January 2024, five of the strategies and plans had been established and reflect the priorities identified in the 2023–24 Corporate Plan, as presented in Table 3.2.

Table 3.2: Delivering in capability development areas

Key: ◆ Being implemented in accordance with the corporate plan ▲ Elements of the implementation are in accordance with the corporate plan ■ Not being implemented in accordance with the corporate plan.

Note a: The wording in the table is from the 2023–24 Corporate Plan.

Note b: The 2022–23 Corporate Plan does not contain this information on how DCCEEW will address regulator performance.

Source: ANAO analysis of departmental documentation.

3.16 Workforce plans analyse the current workforce, determine future workforce needs, identify the gap between the present and the future, and implement solutions to deliver on organisational goals.⁵³ In March 2023, the 2022–23 Corporate Plan noted that DCCEEW was ‘working on operational workforce planning’. DCCEEW commenced the Operational Workforce Planning Initiative, ‘aimed at developing targeted operational workforce plans for each division’ in September 2023. Workforce plans were not in place during 2023. On 7 May 2024, DCCEEW advised the ANAO that ‘this work is now complete.’

3.17 The corporate plans describe an Employee Experience Program that is being developed to ‘enhance our culture and support our mission to be a model employer’. This program is to be supported by research and ‘map the employee life cycle … and build an understanding of individual staff experiences at important touchpoints over the course of their career’.⁵⁴ On 16 November 2023, DCCEEW advised the ANAO that elements of the planned program are being implemented, such as an employee exit survey, action plans following the APS census, and employee pulse surveys.

3.18 DCCEEW is transitioning away from an ICT shared services arrangement with the Department of Agriculture, Fisheries and Forestry ‘to establish our own DCCEEW-managed ICT arrangement’.⁵⁵ On 31 May 2023 the Executive Board considered a business case to guide this transition. This business case did not reflect the six IT priorities and focus areas provided in both corporate plans. On 6 March 2024, DCCEEW advised the ANAO that the procurement and build of ICT capabilities was re-scoped in December 2023 to allow it to occur in parallel with a May 2024 deadline.

3.19 The 2022–23 Corporate Plan provides that the department ‘will continue to review, refresh and increase its ICT capability to reduce dependency on outdated legacy systems … A new ICT Strategy will be developed, aligning with the broader directions of the department and the whole-of-government context’.⁵⁶ On 4 October 2023 the Executive Board decided the transition from a shared services ICT arrangement would take primacy over transformation in the short-term. On 31 October 2023 DCCEEW proposed an approach to the development of a Business Technology Strategy to ‘provide strategic guidance for any area of DCCEEW that consumes or delivers technology’.

Does DCCEEW have arrangements to monitor implementation of the corporate plan?

3.21 From the publication of the 2022–23 Corporate Plan in March 2023 until the end of December 2023, the Executive Board held 21 meetings. In these meetings, the Executive Board considered the strategies and plans listed in Table 3.2. The Executive Board’s 2023 forward workplan included regular updates on corporate plan strategies: quarterly updates on the People Strategy, including information on capability; and monthly updates in financial and property dashboards, including the average staffing level and property risks. The forward workplan included quarterly reporting on cyber security.

3.22 As outlined in paragraphs 2.4 and 2.5, the Executive Board established committees to assist its governance of DCCEEW. Each of these committees was established with terms of reference providing the committee with decision-making authority in its area of responsibility. Committee membership comprises between seven and 14 SES staff. The chair and deputy chair of each committee are to be held by staff at the deputy secretary level, with the exception of the Risk Committee, which is to be chaired by the Secretary.

3.23 The Culture and People Committee, Security Committee, Finance and Investment Committee, and Program and Performance Committee each had their inaugural meeting in November or December 2022, and all met five times during 2023. The Risk Committee was established in December 2023 and held its inaugural meeting in March 2024. According to its terms of reference it will ordinarily meet monthly.

3.24 Each committee has a role in enterprise-wide monitoring. Their monitoring role is provided in Table 3.3.

Table 3.3: Monitoring by Board committees

Note a: This assesses the number of times a strategy or plan has been discussed since the release of the 2022–23 Corporate Plan in March 2023 until the end of December 2023.

Note b: The Risk Committee’s inaugural meeting was March 2024.

Source: ANAO analysis of departmental documentation.

3.25 All committees had forward workplans for 2023 and have developed forward workplans for 2024.⁵⁷

Regular reporting against performance measures

3.26 In May 2023, DCCEEW informed the Audit Committee’s Performance Reporting Sub-Committee that quarterly reporting would ‘commence next financial year against the 2023–24 Corporate Plan’, incorporating ‘updated outcomes, key activities and performance measures’.

3.27 As discussed in paragraphs 3.11 to 3.14, DCCEEW commenced the development of an Enterprise Performance Framework in October 2023, and finalised the framework in May 2024. The framework provides four pillars, including: a ‘performance measurement culture’ where ‘we use data driven performance information in our daily behaviours to create insights that can inform decision-making’; and ‘performance measure practices’ including monitoring, reporting, and reviewing performance information. The framework notes the intention of the department to conduct ‘formal monitoring of measures quarterly’.

3.28 DCCEEW has not established systems or processes to support regular monitoring or reporting against the performance measures in the 2023–24 Corporate Plan, outside the preparation of the annual performance statements (see paragraphs 4.10 to 4.18). On 1 March 2024, DCCEEW advised the ANAO that:

A quarterly performance reporting process has been proposed, integrated into Division level business planning. We are looking to implement this approach following the release of the 2024-25 Corporate Plan in August 2024.

3.29 Non-financial performance information should be an integral part of strategic and operational planning, budgeting, reporting and reviewing processes. Regular monitoring and evaluation of performance information should provide a basis for informed and evidence-based decision-making and accountability. By way of comparison, it is unlikely that there would be confidence in an entity that did not use its financial information for management and business improvement purposes.⁵⁸

Is DCCEEW managing the risks to achieving the outcomes in its corporate plan?

Oversight of enterprise risks

3.31 The Executive Board is responsible for setting DCCEEW’s risk appetite and treating strategic risks. The Board’s forward workplan lists ‘setting and annual review of enterprise risks’ in March each year. The 2022–23 and 2023–24 corporate plans identify eight enterprise risks and provide a narrative of how each risk will be managed.

3.32 On 25 January 2023, the Executive Board considered enterprise risks and a risk appetite statement proposed to be included in the 2022–23 Corporate Plan. The proposed risks were identified as ‘the overarching risks that may impact delivery of our purpose and were identified by divisions as part of recent updates to Divisional Risk Registers’. The enterprise risks were approved by the Executive Board on 25 January 2023 and subsequently included in the 2022–23 Corporate Plan.

3.33 At the time of approving the enterprise risks, the Executive Board was not presented with an assessment of enterprise risks including whether risks were within tolerances.

3.34 DCCEEW released its Enterprise Risk Management Framework (ERMF) in March 2023. The ERMF was updated in September 2023 with minor edits. The ERMF seeks to embed a positive risk culture in the department and outlines the approach for ‘embedding risk management into our culture, work practices and decision making’. It is underpinned by the principles of a positive risk culture; embedding a risk strategy; appropriate risk governance; and processes and procedures to deliver risk management practices. The ERMF aligns with all nine elements of the Commonwealth Risk Management Policy.⁵⁹

3.35 The Executive Board did not review or discuss enterprise risks during the development of the 2023–24 Corporate Plan and the enterprise risks did not change from the 2022–23 Corporate Plan.⁶⁰

Board committee review and oversight of enterprise risks

3.36 The Executive Board agreed in February 2023 that the ‘Chair of each governance committee will be assigned accountability for the management of the relevant enterprise risks on behalf of the Secretary’. The 2022–23 and 2023–24 corporate plans specify which Executive Board committee is responsible for overseeing the enterprise risks. Each committee includes its role with regard to enterprise risks in its terms of reference. Table 3.4 identifies the committee responsible for each enterprise risk and describes how each committee exercised its oversight of enterprise risks during 2023.

Table 3.4: Enterprise risk oversight by Executive Board committees

Note a: The responsibility for enterprise risk seven is shared between the PPC and Security Committee. This risk is not listed in the PPC’s terms of reference. This risk was not included in the version of the risk profile snapshot provided to the Audit Committee in June (see paragraph 3.40). It was included in the September snapshot and mis-assigned to the FIC.

Note b: The CPC was given responsibility for enterprise risk four in July 2023, following the merging of the Work Health and Safety Committee into the CPC in April 2023.

Source: ANAO analysis of departmental documentation.

3.37 In February 2023, DCCEEW proposed to develop a risk profile for each enterprise risk. The profiles would ‘complement existing reporting to governance committees to support the oversight and management of the risks’.

3.38 In April 2023, draft risk profiles were provided to the Finance and Investment Committee for the two enterprise risks for which it has responsibility. The draft risk profiles were based on ‘divisional and program risk data where available’ and included sources/drivers; consequences; controls; treatments; and observations for each enterprise risk. The draft risk profiles did not include an assessment of the risks.

3.39 The Enterprise Risk Team’s role is to ‘prepare and present an Enterprise Risk Profile at each meeting [of the Finance and Investment Committee] for the consideration of the Committee. This includes providing oversight of other Enterprise Risk Profiles’ for the other Board committees. At January 2024, risk profiles had not been finalised for the enterprise risks.

3.40 A ‘Risk Profile Snapshot’ was provided to the Audit Committee in June 2023, and an updated snapshot in September 2023. The June snapshot included seven of the eight enterprise risks. All eight risks were included in the September snapshot. For each enterprise risk, the snapshots included between three and six: sources of risk; consequences; and risk management strategies.

3.41 In total, 15 management strategies were listed in the risk snapshots, 10 of which were included in the 2023–24 Corporate Plan. These management strategies comprised: enterprise-wide programs (such as quality and assurance programs); specific strategies (such as the People Strategy); and activities that occur within individual programs (such as engagement with states and territories).

3.42 The Executive Board established a Risk Committee in December 2023, with the inaugural meeting in March 2024. The Risk Committee is to ‘provide review and oversight of key risks relating to the department’s major programs and change activities’. Two of the roles of the Risk Committee are:

• reviewing and oversight of the department’s major programs to ensure that risks are clearly identified, have appropriate management approaches including mitigations and appropriate governance arrangements for escalation for risks, consistent with the Enterprise Risk Management Framework (ERMF);
• providing an entity wide perspective of risk including consideration at an enterprise level on the risk profile and the risks of the department. This includes reporting to the Board in relation to oversight of the major programs and change activities and decisions that inform the management of our enterprise risks.’

3.43 The Risk Committee’s draft workplan requires ‘setting and annual review of enterprise risk’ in July each year.

Enterprise risk management

3.44 The ERMF requires risk management to be integrated into ‘planning and decision-making, including those made by senior leaders’. The Enterprise Risk Management Approach is described as contributing to the achievement of the purposes and outcomes in the corporate plan. Enterprise risks are defined as ‘risks that impact the delivery of our outcomes’ and are one of five types of risk alongside: divisional risks, operational risks, strategic risks and specialist risks.

3.45 DCCEEW’s risk management, as documented in the ERMF, includes that:

• where a risk is assessed as being outside of the department’s tolerance, risk treatment programs should be implemented;
• a senior responsible officer is ultimately responsible for the management of each risk;
• the first line of defence includes risk owners, senior responsible officers, and all staff. Governance boards and committees are considered the second line of defence, providing support, monitoring and guidance; and
• additional risk treatments should be applied where risk is assessed as being outside appetite and tolerance statements.

3.46 According to the ERMF, ‘practices and procedures applied to identify, assess and manage risk across the department must [original emphasis] be consistent and aligned with best practice’.

3.47 The ERMF defines risk management practices through four elements. An assessment of DCCEEW’s implementation of its ERMF with regard to enterprise risks, using the relevant elements, is provided in Table 3.5.

Table 3.5: Management of enterprise risks in accordance with DCCEEW’s ERMF

Key: ◆ The element of the ERMF is being applied to enterprise risk management ▲ The element of the ERMF is partly being applied to enterprise risk management ■ The element of the ERMF is not being applied to enterprise risk management.

Note a: Element 1 of DCCEEW’s ERMF is ‘Communication and consultation’ and provides that ‘Staff at all levels must communicate and regularly consult on risks within their work’. The ANAO did not assess the management of enterprise risks against this element.

Note b: FIC is the Finance and Investment Committee; PPC is the Program and Performance Committee; SC is the Security Committee; and CPC is the Culture and People Committee.

Source: ANAO analysis of departmental documentation.

3.48 As outlined in Table 3.5, enterprise risks have not been assessed against DCCEEW’s risk appetite or tolerances as defined in the ERMF, there has been no consideration of the effectiveness of controls in managing the risk, and the manner through which committees report to the Executive Board does not provide the Board with assurance that enterprise risks are being managed effectively.

4.1 The accountable authority must measure and assess the entity’s performance in achieving the entity’s purposes in accordance with the method set out the corporate plan, and present the results in annual performance statements.⁶¹ The annual performance statements must be included in the annual report, which is tabled in the Parliament.⁶² It is important that the accountable authority has confidence that the entity has adequate systems, processes and assurance arrangements in place to support the preparation of accurate annual performance statements.

Has DCCEEW developed systems and processes to support quality performance reporting?

Governance over performance reporting

4.2 The Executive Board Charter defines one of the purposes of the Executive Board as ‘ensuring departmental performance and achievement of purposes’. The Executive Board Charter delegates responsibility to the Program and Performance Committee (PPC) for ensuring ‘that key departmental programs and policies are achieving their desired outcomes’. The Executive Board’s workplan indicates that annual report planning and finalisation of timelines is to be discussed annually in February.

4.3 The PPC’s terms of reference designate it with the responsibility for ‘leading the department’s approach to enterprise-wide program reporting against the Corporate Plan’. The PPC’s workplan includes considering the approach to annual performance statements in June and reviewing the draft annual report prior to Executive Board clearance in August.

Performance measure profiles

4.4 DCCEEW developed measure profiles to support each performance measure (see paragraphs 2.13 to 2.16 and paragraph 2.25). The measure profiles were based on a template that required information on data sources, a brief description of how the data will be analysed and validated, and limitations on the data. The measure profile template also included how often reporting occurs, and whether it is possible to track progress against the measure more frequently than annually.

4.5 Different approaches are evident in the level of detail in the measure profiles and there is a risk the measure profiles are incomplete or do not provide a consistent level of assurance.

• All measure profiles provide information on how the data could be validated — 18 of the 21 profiles (86 per cent) describe a validation process that will, or already does, occur. Three of the measure profiles (14 per cent) describe possible validation processes that could be applied if required.
• Eleven of the measure profiles (52 per cent) list the DCCEEW branch responsible for the collation and analysis of the data. Four of the measure profiles (19 per cent) provide this responsibility at the division level and six (29 per cent) at the section level.
• Procedures for data collection and analysis are dealt with differently across the measure profiles. Nine of the 21 2023–24 measure profiles (43 per cent) refer to additional procedures that are not contained within the measure profile. There is no reference to more detailed procedures in the remaining 12 measure profiles (57 per cent).

4.6 Three of the measure profiles document using data owned by external entities and the 21 performance measures are supported by 12 different systems or databases within DCCEEW.

4.7 In January 2024, the ANAO met with seven measure owners (responsible for 13 of the 21 performance measures). Measure owners discussed actions underway to improve measures, and actions to provide confidence in the data supporting performance information, particularly when that data is provided by third parties. Six of the seven measure owners discussed actions and limitations that were not reflected in the measure profiles, including actions to improve the suite of measures to provide a more complete set of performance measures.

4.9 Each measure profile is to be certified by the division head, and the date of certification is provided on the profile. All measure profiles document the division responsible for the measure and the individual who was the division head at the time the profile was certified. The profiles also document the ‘Accountable Deputy Secretary’.

Process for preparing the 2022–23 Annual Report

4.10 As discussed in paragraphs 4.2 and 4.3 the PPC is responsible for leading DCCEEW’s reporting against the Corporate Plan. On 1 August 2023, the PPC considered the draft 2022–23 Annual Report including the annual performance statements, and noted them in accordance with its annual workplan.

4.11 The Executive Board’s workplan indicates that annual report planning would be discussed annually in February (see paragraph 4.2). Annual report planning was not discussed by the Executive Board in February 2023. The Executive Board considered the approach to the development of the 2023–24 Annual Report in April 2024.

4.12 The Executive Board endorsed the final draft 2022–23 Annual Report on 5 September 2023.⁶³ The Secretary approved the 2022–23 Annual Report on 20 September 2023 in accordance with the initial timetable provided to the PPC in May. The Annual Report was tabled in the Parliament on 20 October 2023.⁶⁴

Annual report implementation plan

4.13 On 31 May 2023, the Performance Reporting Sub-Committee of the Audit Committee noted the draft ‘2022–23 Annual Report and Annual Performance Statements Implementation Plan’ (draft Implementation Plan) that defined the project plan for the preparation of the annual report in accordance with the PGPA Act. The draft Implementation Plan was not approved.

4.14 The draft Implementation Plan listed principles to guide the production of the annual report, including:

• reporting practices will be contemporary as defined by the Department of Finance guidelines and Commonwealth best practice examples;
• internal processes will be streamlined whilst ensuring relevant review and clearances are met, including early engagement with the executives;
• information about DCCEEW’s performance will be clear and meaningful and incorporate lessons learnt from the 2022 ANAO performance statement audit⁶⁵; and
• an audit of legislative reporting requirements will be conducted.

4.15 The draft Implementation Plan contained a governance structure, record keeping instructions, and detailed descriptions of roles and responsibilities for all stakeholders involved in the production of the 2022–23 Annual Report. It noted that each division, via the Executive Officer Network, was responsible for preparing content for clearance by division heads and deputy secretaries. The Assistant Secretary and the Performance and Audit Director of the Ministerial Liaison and Governance Branch were responsible for leading the annual reporting process for DCCEEW. The Performance Team in the same branch was to provide centralised project management and coordination.

4.16 The draft Implementation Plan noted that planning documents, templates, content input from divisions, performance results, procurement documentation, final versions of report content, and assurance certifications would all be stored in allocated files in one of DCCEEW’s record management systems.

4.17 To facilitate communication with divisions, the draft Implementation Plan noted that the Performance Team would set up a site within Microsoft Teams. Emails to the measure owners and deputy secretaries requesting certification of performance information notes that templates for the certification were available on the Teams site.

4.18 The process provided by the draft Implementation Plan specifies that ‘annual performance result templates and guidance’ would be distributed to relevant divisions to be populated. The template included information on the result, the factors that contributed to the result, caveats, and methodology and data sources.

Consideration of risk

4.19 The draft Implementation Plan for the 2022–23 Annual Report included a risk assessment for preparing the annual report. The risk assessment outlined seven risks, all of which were rated as ‘high’. Six risks were accepted with no further action required, while the seventh risk, that the annual report is not tabled in the required timeframe due to unforeseen circumstances, required an additional treatment.⁶⁶ The identified treatment for the seventh risk was that ‘The Department will escalate as quickly as possible through Executives and Minister’s offices’. The reason one of the risks was not accepted and required additional treatment when all seven risks were rated as high was not documented. DCCEEW advised the ANAO on 6 March 2024 that high risks require controls when the level of risk is above the tolerance level.

Does DCCEEW have quality assurance arrangements to ensure reporting is complete and accurate?

Management certifications

4.20 DCCEEW established a two-stage management certification process under the draft Implementation Plan as part of assurance processes for the 2022–23 Performance Statements in the 2022–23 Annual Report. In addition to certifying measure profiles for inclusion in the corporate plan (see paragraphs 2.15 and 2.26), each division head who is a measure owner was to ‘certify the accuracy of their performance results using an assurance certification’. Deputy secretaries ‘will also provide assurance certification on performance results once all measures owner certifications have been collated.’

4.21 The draft Implementation Plan included templates for this certification by measure owners and deputy secretaries. The templates required the measure owners and deputy secretaries to certify they were satisfied that:

• the data and information accurately describe the performance of my division(s) in achieving the department’s purposes for the reporting period ending 30 June 2023;
• the division(s) has (have) undertaken appropriate processes to validate the data used to prepare the performance results, including data sources that are reliable and verifiable;
• the data and information are supported by relevant records and adequate record-keeping practices;
• any caveats and disclosures accurately describe the limitations of the data or information in representing the department’s performance; and
• there are no additional matters that need to be considered or raised to enable the Accountable Authority to certify the accuracy of the 2022-23 annual performance statements.

4.22 DCCEEW advised the ANAO on 1 March 2024 that the templates that were used for certifications were updated following ‘feedback and refinements from the Audit Committee/Performance and Reporting Sub-Committee’.

4.23 Division heads responsible for certifying performance information gained the confidence to provide certification through a mixture of discussions with their staff; peer-reviewed scientific methodologies; and well-defined external national and international reporting frameworks.

4.24 Certifications were provided by all measure owners and deputy secretaries for all measures included in the 2022–23 Performance Statements.

Audit Committee role

4.25 Under section 17 of the PGPA Rule, the functions of an entity’s audit committee include reviewing the appropriateness of the accountable authority’s performance reporting. DCCEEW’s Audit Committee’s Charter states that the Audit Committee is responsible for reviewing the appropriateness of the department’s systems and procedures for reporting on performance and assuring itself the department’s approach to measuring performance is appropriate. The Audit Committee meets at least four times a year.

4.26 The Audit Committee’s Performance Reporting Sub-Committee considered performance information at its April and May 2023 meetings and considered the appropriateness of the draft annual performance statements in August 2023.⁶⁷

4.27 The sub-committee commented on ‘the need for further analysis around cross cutting themes (regulation, policy, management level activities); importance of robust and repeatable methodologies; querying individual measures such as liquid fuels and leveraging co-investment on low emissions technologies; the need to review and update self-assessment against 16EA of the PGPA Rule; assurance of data provided by third parties.’

4.28 On 12 September 2023, the Audit Committee was asked to note the final 2022–23 Performance Statements. The Audit Committee Chair advised the Secretary that the audit committee advised that:

• no significant issues have been brought to our attention that would prevent the signing of the Department of Climate Change, Energy, the Environment and Water’s 2022–23 performance statements
• the performance statements are, at this time, acceptable, noting there is a risk that the formal requirements of the PGPA Act may not be satisfied in the presentation of the 2022–23 Performance Statements
• reporting as a whole is appropriate at this time and for the department’s stage of maturity, and the reporting of performance information within the statements in [sic] considered fit for purpose.

4.29 The Audit Committee noted the department’s continued commitment to improve its performance information, through improving the measures in the 2023–24 Corporate Plan, and the development of an Enterprise Performance Framework by early 2024.

Continuous improvement

4.30 As part of the process of assessing the appropriateness of performance measures (paragraphs 2.39 to 2.49) some measure profiles that DCCEEW assessed as not meeting all the requirements of the PGPA Rule identified actions for improvement.

• In 2022–23, DCCEEW determined four measures did not meet all the requirements of the PGPA Rule. DCCEEW identified actions to improve two of those four measures. Those two measures were both removed in the 2023–24 Corporate Plan.
• In 2023–24, DCCEEW determined six measures did not meet all the requirements of the PGPA Rule. Two measures had plans for improvement.

4.31 The Enterprise Performance Framework (see paragraphs 3.11 to 3.14) is intended to ‘embed performance measurement into [DCCEEW’s] culture, governance and decision-making processes’. The framework is to support the review of key activities and performance measures, identifying ‘the best way to meaningfully measure performance’.

4.32 In December 2023, divisions were asked to document key risks to the successful completion of key activities. During January 2024, divisions participated in workshops to discuss improvements that could be made to performance measures. At March 2024, DCCEEW had not completed risk assessments based on the risks documented in December 2023.

4.33 In March 2024 the Executive Board endorsed revised performance measures for the 2024–25 PBS and Corporate Plan. The Enterprise Performance Framework was finalised in May 2024.

4.34 The Executive Board recognises DCCEEW is on a ‘maturity path’ in measuring performance against its purposes, supported by ‘a formal program of work … to review the key activities and ensure performance measures were reflective of the department’. This approach to continual improvement is reflected by measure owners (division heads) and deputy secretaries, who understand the limitations of their measures and are considering how their suite of measures could be improved.

Internal audit program

4.35 The 2022–23 internal audit program was approved by the Executive Board on 9 September 2022, and provided to the Audit Committee for noting at its first meeting on 9 December 2022. The Executive Board noted that ‘corporate audits would be kept to a minimum in light of the stage of implementation of the (Machinery of Government) changes, but corporate will be prioritised in the 2023–24 program’. There were no audits on the 2022–23 internal audit program relating to corporate planning.

4.36 On 13 June 2023, the Audit Committee endorsed the 2023–24 internal audit program, which was approved by the Secretary on 28 June 2023. Key activities and enterprise risks were taken into consideration in the development of the 2023–24 internal audit program, and the potential audits are aligned to enterprise risks. Internal audits are proposed relating to enterprise risks one, two, five, six and seven (see Table 3.4 for a list of the enterprise risks). No internal audits are scheduled that relate to risk three: unable to attract, develop and retain the people and internal capabilities required; and risk four: do not protect the health, safety and wellbeing of people.

4.37 The program includes a potential topic on ‘Performance Measures’ in Quarter 3, with the objective: ‘to test the integrity of the draft results of performance measures for the 2023–24 Annual Performance Statements’. On 7 May 2024 DCCEEW advised the ANAO that this audit has been completed and a final report will be provided to the Audit Committee.

Appendix 1 Entity response

Appendix 2 Improvements observed by the ANAO

1. The existence of independent external audit, and the accompanying potential for scrutiny improves performance. Improvements in administrative and management practices usually occur: in anticipation of ANAO audit activity; during an audit engagement; as interim findings are made; and/or after the audit has been completed and formal findings are communicated.

2. The Joint Committee of Public Accounts and Audit (JCPAA) has encouraged the ANAO to consider ways in which the ANAO could capture and describe some of these impacts. The ANAO’s corporate plan states that the ANAO’s annual performance statements will provide a narrative that will consider, amongst other matters, analysis of key improvements made by entities during a performance audit process based on information included in tabled performance audit reports.

3. Performance audits involve close engagement between the ANAO and the audited entity as well as other stakeholders involved in the program or activity being audited. Throughout the audit engagement, the ANAO outlines to the entity the preliminary audit findings, conclusions and potential audit recommendations. This ensures that final recommendations are appropriately targeted and encourages entities to take early remedial action on identified matters during the course of an audit. Remedial actions entities may take during the audit include:

• strengthening governance arrangements;
• introducing or revising policies, strategies, guidelines or administrative processes; and
• initiating reviews or investigations.

4. In this context, the below actions were observed by the ANAO during the course of the audit. It is not clear whether these actions and/or the timing of these actions were planned in response to proposed or actual audit activity. The ANAO has not sought to obtain assurance over the source of these actions or whether they have been appropriately implemented.

• The Enterprise Performance Framework is intended to provide a process for operationalising the corporate plan and reviewing performance measures. The framework was under development by consultants during the course of the audit and was finalised in May 2024.
• In April 2024 DCCEEW prepared status reporting against each of the 2023–24 performance measures to inform the development of the 2024–25 Portfolio Budget Statements.
• The Executive Board established the Risk Committee during the course of the audit.

Appendix 3 DCCEEW’s purposes, outcomes, key activities and performance measures

Figure A.1: DCCEEW 2022–23 Corporate Plan — purposes, outcomes, key activities and performance measures

Source: Departmental documents.

Figure A.2: DCCEEW 2023–24 Corporate Plan — purposes, outcomes, key activities and performance measures

Source: Departmental documents.